Is Bankruptcy a Good Idea for You?
There are several factors that need to be taken into consideration when answering is bankruptcy a good idea for you.
Firstly, look at the different type of bankruptcy options that may be available to you. The most commonly filed consumer bankruptcies in the United States a Chapter 7 bankruptcy and a Chapter 13 bankruptcy.
Is bankruptcy a good idea for you: Chapter 7
This is a three to six month process that can eliminate most unsecured debt and give you a fresh financial start. However, there is the risk of losing some property when you file a Chapter 7 bankruptcy. You can find out more by looking at Chapter 7 Bankruptcy Rules.
Is bankruptcy a good idea for you: Chapter 13
Which is a proceeding that is much more complex than a Chapter 7 bankruptcy. When you file a Chapter 13 bankruptcy, you will be required to submit a payment plan to the Court indicating how future income will be used to pay off all or a portion of your debt over time. You can find out more by looking at Chapter 13 Bankruptcy rules.
Is Considering alternatives to filing bankruptcy a good idea for you?
Bankruptcy may not be right option for everyone. As such, may unnecessary bankruptcies are filed. Carefully examine your financial documents – bankruptcy may not be the only option for you.
Ensure that you qualify for your preferred bankruptcy Chapter
Another important factor to take into consideration when asking is bankruptcy a good idea for you, is to make sure that you qualify for your preferred Chapter. In order to file for either a Chapter 7 or a Chapter 13, there are certain eligibility requirements that have to be fulfilled. If your income is too high, you may not be able to file a Chapter 7 bankruptcy. On the other hand, if your income is too low, you may not be eligible to file a Chapter 13 as your will not be able to afford the monthly Chapter 13 payments.
Determine if your debt can be discharged
Although filing bankruptcy may help you eliminate the vast majority of your debt, there are some obligations that have to be paid back. For example, child support, alimony, criminal judgments and certain tax debt cannot be eliminated by filing bankruptcy. It is important to be sure that your debts will be discharged before filing a bankruptcy case.
Find out what will happen to your home when you file bankruptcy
Filing bankruptcy should not leave you homeless. Always think about the ramifications a bankruptcy filing will have on your home. If you are already experiencing problems keeping up with your mortgage payments, they may become easier if your other debts are discharged. If you file a Chapter 7 bankruptcy, and have a substantial amount of equity in your home, there is a chance that you may have to surrender it. If you want to save your home and your income is high enough to file a Chapter 13 bankruptcy, you can include your mortgage arrearage in your Chapter 13 bankruptcy payment plan, and save your home.
Figure out what will happen to other property, such as your car
The fate of your other property during bankruptcy proceeding is contingent to what you have done with your property, as well as the applicable bankruptcy exemption laws.
Determine if your credit card debt will be forgiven
If you have a large amount of credit card debt, if is important to make sure that your bankruptcy filing will free you from the obligation of paying it back. Generally, a Chapter 7 bankruptcy eliminates credit card debt. However, if you lied on your application, you will be required to pay back the debt.
Make sure that your pension plans are safe guarded
Bankruptcy laws protect most pensions fund and insurance policies. However, it is never a bad idea to check if your pensions plans and insurance will be protected.
Make sure that creditors do not go after your co-signers
Another important factor when questioning is bankruptcy a good idea for you is the effect it will have on your co-signers. It is essential to go back to your debt agreements and make sure that none of your co-signers will be stuck paying back what you owe. Generally, a Chapter 13 offers protection to co-signers; a Chapter 7 does not.